I am curious if others out there are running into issues where clients are asking what are permissible investments because the underlying prototype document does not really give good guidance in terms of entity type of investments.

When it comes to investments in various entities I am getting confused about these DOL rules governing when a plan invests in an entity and whether or not those investments are considered plan assets....

Can anyone shed some light on this for me? I am rather confused and surely am mixing things up a little. Where can I go for more information on permissible qualified plan investments as pertains to these entity type investments?

All institutional custodians/trustees have rules about what classes of assets they will accept. Many will only accept publicly traded securities and will pass on LPs, foreign securities, non publicly traded stock, RE, mortgages, promissory notes,etc. You need to ask the custodian/trustees what assets they will accept. If the plan uses individual trustees who hold assets directly in the name of the plan then you need to retain counsel.

Look to the possibilities of Prohibited Transactions. Many non-institutional plan documents allow a wide range of investments, but no assurance they are tax-exempt. Transactions between Disqualified Persons can be disadvantageous as well.

The answer lies in: DOL op. 94-31A; DOL op. 92-24A; CFR 2510.3-101(g); CFR 2509.75-8